Dairy Futures and Options Tutorial

Options Self Study Questions

For each question, click on the answer you think is correct. The box below each question indicates whether the selected response is correct. To see a listing of the correct answers, click on after each question.

Question 1
Which of the following describes an option?

Establishes a fixed price
Must be used in conjunction with a futures contract
Gives you the right to buy or sell a futures contract
Has a value determined independently of what is occurring in the future market

Question 2
The term short means:

To sell
To buy
To have limited risk
A futures contract set to expire in the near term

Question 3
The term long means:

To sell
To buy
To hope for a better price
A futures contract that has considerable time until expiration

Question 4
A PUT option:

Must be offset by a CALL option
Gives you the right to buy a futures contract at a set price
Gives you the right to sell a futures contract at a set price
Requires the establishment of a margin account

Question 5
A CALL option:

Must be offset by a PUT option
Gives you the right to buy a futures contract at a set price
Gives you the right to sell a futures contract at a set price
Requires the establishment of a margin account

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